On Wednesday, Citi updated its outlook on Advanced Micro Devices, Inc. (NASDAQ:AMD), adjusting the chipmaker's stock price target to $176 from the previous $192. The firm maintained its Buy rating on the stock.
The revision follows AMD's recent financial report, which was released after the market closed on Tuesday, revealing satisfactory performance and a forecast that exceeded market expectations, largely due to the progress of the MI300 product line.
AMD's guidance for the MI300 has been increased, with projections now surpassing $4 billion in revenue for 2024, up from the earlier forecast of over $3.5 billion. Despite the positive momentum in certain areas, Citi has revised its estimates for AMD, factoring in potential declines in the company's embedded and gaming segments, which collectively accounted for 32% of sales in the first quarter of 2024.
The semiconductor company's latest report and its optimistic guidance for the MI300 have been the primary drivers for Citi's continued endorsement of AMD as a Buy. The financial firm anticipates that there will be additional gains for AMD's stock as the summer approaches, despite the adjustments made to the company's financial estimates.
AMD's recent performance and raised forecast for the MI300 chip have contributed to Citi's confidence in the stock's potential for growth. The firm's analysis suggests that while there are segments within AMD's portfolio that may experience downward trends, the overall outlook remains positive, leading to the decision to reiterate the Buy rating.
InvestingPro Insights
Advanced Micro Devices, Inc. (AMD) is currently trading at a high earnings multiple, with a P/E ratio of 299.41 as of the last twelve months ending Q4 2023. This reflects the market's optimism about the company's growth prospects, which is substantiated by the expectation of net income growth this year. AMD has also demonstrated a strong return over the last year, with a 76.59% price total return, indicating robust investor confidence and market performance.
Despite a slight revenue decline of 3.9% in the last twelve months as of Q4 2023, AMD's quarterly revenue growth shows a positive trend with a 10.16% increase in Q4 2023, aligning with the company's optimistic guidance for the MI300 product line.
The company's gross profit margin remains high at 50.27%, suggesting efficient operations and cost management. With a market capitalization of $255.96 billion USD, AMD stands as a prominent player in the Semiconductors & Semiconductor Equipment industry.
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